Are shipping charges taxable?
When included in the retail sales price, a shipping charge from the manufacturer or wholesaler to the retailer is considered a cost of doing business and is included in the taxable proceeds from the sale. If goods are shipped directly from the manufacturer or wholesaler to the purchaser, a charge for freight may be excluded from taxable gross proceeds if separately stated. Actual freight charged by the retailer to deliver goods to the purchaser is not taxable under the retail classification if separately stated on the invoice.
Separately stated shipping charges, including postage, are not subject to Virginia sales tax. However, shipping charges that are combined with handling or other fees as a single charge are subject to the tax. I recently purchased some books from a catalog. The invoice listed the price of the books, plus a fee for “shipping and handling,” and the seller charged sales tax on the total of these items. Why did I have to pay sales tax for shipping? Although separately stated shipping charges are exempt, handling charges are subject to the Virginia sales tax. Because the shipping in this transaction was combined with a handling fee as a single charge, the entire amount of charge is taxable.
